Brexit

Is the Greek financial crisis the reason we are leaving the EU?

To develop the fiscal converging criteria for all EU members, in the year 1992, the leaders of twelve member states of the European Economic Community sign the Treaty of Maastricht,  establishing the Economic and Monetary Union (EMU).

Seven years later, EU launches its joint currency, and in the year 2001, Greece replaces the Greek Drachma with the EURO currency, becoming a member of the Eurozone.

In the year 2009, the Socialist leader, George Papandreou becomes Greece’s  Prime Minister and raises concerns about Greece’s budget deficit, which exceeded 12% of the GDP.

Due to low tax revenues and increasing sovereign debt, Greece’s borrowing costs spiralled, downgrading the country’s credit scoring standing.

To prevent Greece from bankruptcy, in the year 2010, the European Union decided to loan Greece 100 billion euros over three years, under the condition that government of their south-eastern member states increases taxes and implements harsh austerity measures of spending cuts of up to 30 billion euros.

This provoked massive outrage throughout Greece, and rather than destroying the businesses and properties of the Greek tax-dodgers who caused the financial crisis, the protesters ended up destroying public property and injuring the police officers who also suffered from the austerity measures.

Christine Lagarde, the French  Finance Minister at the time, in 2010, provided Greek authorities information on the massive tax – avoidance that accounts for almost €27 billion of uncollected annual tax revenues, which almost equals to the EU annual rescue loan, and if Greek authorities prevented tax avoidance, their financial crisis would have never occurred.

Yet, despite the shocking insights revealed by the “Lagarde List”, according to The Guardian, Greek’s ex-finance minister George Papaconstantinou, a person committed to modernising Greek policies, did intervene to remove his three relatives from the list of individuals implicated in tax avoidance.

According to Reuters, rather than summoning the wealthy tax-dodgers, the Greek prosecutor charged the editor the weekly magazine “Hot Doc”, Costas Vaxevanis, for violating data privacy laws because he published the names of over 2,000 wealthy Greek citizens, who were implicated in tax-avoiding practices and included in the “Lagarde List”. 


Greece’s failure to prevent tax – avoidance, alarmed Brussels, which initiated concrete steps to tackle tax avoidance and protect the Eurozone, by preventing the future fiscal crisis from developing among its member states.

According to The Guardian, ahead of the 2011 G20 Summit held in Cannes, The Taskforce on Financial Integrity and Economic Development, an international NGO, called upon the G20 summit for much tougher global measures to tackle tax avoidance, demanding concrete action that will ensure transparency and economic justice by ending the corrosive financial and the fiscal system.

Speaking at the G20 summit press conferencethe French President Nicola Sarkozy warned that tax havens will no longer be tolerated and countries, which continue to protect them, will be outcast from the developed economies.

Six months after the G20 summit, the European Commission decided to develop their strategy for accomplishing the following objectives:

1. Improve action to protect Member States’ tax revenues against the challenges of aggressive financial and tax jurisdictions and unfair competition deriving from aggressive tax planning.

2. Reduce opportunities for harmful tax practices including exploitation of mismatches between tax systems and better ensure that good governance in the tax area is, in coherence with other EU policies, efficiently addressed on as broad a geographical basis as possible.

3. Achieve a coordinated approach at EU level in terms of incentives and sanctions towards cooperative and uncooperative jurisdictions, to add leverage in convincing third countries to enhance good governance.

4. Improve coordination of the EU MS’ position in international fora dealing with non-cooperative jurisdictions.

European Commission revealed its plan to tackle tax avoidance within its member states on 15 May 2012, and eight weeks later, the BBC reported that “Dodgy Dave”, the British Prime Minister who ruled out the possibility of an EU referendum, suddenly changed his mind on the EU referendum and he is considering of holding it but only when the time is right!

David Cameron decided that the right time to call the EU referendum was, three weeks after the European Commission revealed its draft EU Anti Tax Avoidance Directive, which would force the British government to collect outstanding taxes from businesses that generate capital gains before they move their assets to offshore tax haven territories.


European Commission revealed their proposal for their new EU Anti Tax Avoidance Directive on 28 January 2016, and on 20 February 2016, David Cameron announced the June date for UK’s vote on whether to stay or leave the European Union.

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